FSA GROUP LIMITED — Interim / Quarterly Report 2013

Feb 21, 2013

Appendix 4D

Half yearly report

FSA Group Limited

ABN Half year ended (‘current reporting period’) 98 093 855 791 31 December 2012 2.0 Results for announcement to the market	Half year ended (‘current reporting period’)	‘Previous corresponding period’ 31 December 2011 $A'000
	31 December 2012	31 December 2011
2.1 Revenue from ordinary activities (net of finance expense) up 9.2% To 31,204 2.2 Profit from ordinary activities after tax attributable to members up 16.1% To 4,319 2.3 Net profit for the period attributable to members up 16.1% To 4,319 2.4 Dividends Interim dividend payable 20 March 2013 of 1.75 cents per share (fully franked) 2.5 Record date for determining entitlements to the interim dividend 5 March 2013 2.6 For an explanation of the figures in 2.1 to 2.4 above, refer to the “Results and Review of Operations” contained in the Directors’ Report which forms part of the financial statements.

3.0 Net tangible assets per ordinary security	Current reporting period	Previous corresponding period
Net tangible assets per ordinary security, after adjusting for Non- controllinginterests	39.2 cents	36.4 cents
		Notes
4. Details of the entities over which control has been gained or lost during the period		Not applicable
5. Dividends
Total dividends paid		See Note 7
6. Dividend reinvestment plans
There are no dividend reinvestment plans.
7. Associates and joint ventures		See Note 5
8. Foreign entities
There are no foreign entities
9. Independent audit report or review		See Page 14

FSA GROUP LTD

ABN 98 093 855 791

Interim Financial Statements

31 December 2012

DIRECTORS' REPORT

The directors submit their report for the half-year ended 31 December 2012.

DIRECTORS

The names of the directors of FSA Group Limited (“FSA Group”) in office during the half-year and until the date of this report are shown below.

Sam Doumany (Non-Executive Chairman) Tim Odillo Maher (Executive Director) Deborah Southon (Executive Director) Stan Kalinko (Non-Executive Director) Sally Herman (Non-Executive Director)

RESULTS AND REVIEW OF OPERATIONS

Principal activities

The principal activities of FSA Group are the provision of debt solutions and direct lending services to individuals and businesses.

Operating Results

FSA Group’s profit after tax attributable to members of the parent for the half year ended 31 December 2012 was $4.3m (2011: $3.7m). This result represents a 16% increase when compared to the half year ended 31 December 2011.

The key indicators compared to the previous corresponding period are:

• Revenue and income of $31.2m up 9%

• Profit before tax of $7.2m up 8%

• NTA backing/share of 39.2 cents up 8%

• EPS basic of 3.33 cents up 24%

Dividends

The directors have declared an interim fully franked dividend of 1.75 cents per share, with a record date of 5 March 2013 and payable on 20 March 2013.

Overview

FSA Group is Australia’s largest provider of debt solutions. The business operates across the following key segments, Services, Home Loans and Small Business. The profitability before tax of each segment is as follows:

Profitability	1HFY2012 1HFY2013 %
Services	$5.0m $4.6m Down 8%
Home Loans	$2.1m $2.6m Up21%
Small Business	($0.6m) ($0.1m) Up79%
Other	$0.1m $0.1m Up43%
Profit before tax	$6.6m $7.2m Up8%
Profit after tax attributable to members	$3.7m $4.3m Up16%

During the first half of the 2013 financial year, FSA Group achieved a significant uplift in cash flow from operations driven by the increased number of clients administered. FSA Group expects client numbers will continue to grow during the 2013 financial year.

operations driven by the increased number of will continue to grow during the 2013 financial	clients administered. FSA Group expects client n year.
	1HFY2011 1HFY2012 1HFY2013
Net cash inflowfrom operating activities	$2.8m $3.2m $7.5m

1

DIRECTORS’ REPORT Continued

Operational Performance

Services

The Services division offers a range of simple and convenient solutions to assist clients wishing to enter into a payment arrangement with their creditors. These include informal arrangements, debt agreements, personal insolvency agreements and bankruptcy.

FSA Group is the largest provider of debt agreements with around 50% market share. We are also one of the largest providers of personal insolvency agreements and bankruptcy in the country.

New client numbers during the first half of the 2013 financial year were as follows:

New Client Numbers	1HFY2012vs. 1HFY2013
Debt Agreements	Up5%
Personal InsolvencyAgreements and Bankruptcy	Up1%

FSA Group’s arrears and risk management capabilities are a competitive advantage. FSA Group manages over $296m of unsecured debt under debt agreements. During the first half of the 2013 financial year FSA Group paid $38.6m in dividends to creditors which was an increase of 12% when compared to the previous corresponding period.

Home Loans

The Home Loans division offers a range of simple and convenient solutions to assist clients with property wishing to consolidate their debt. FSA Group offers solutions both as a lender and manager of home loans. The non-conforming home loan market consists of lenders who provide loan products to an individual who is unlikely to conform to the lending criteria of the banks.

We have originated a high quality loan pool of over $231m which is outperforming those of our competitors. Greater than 30 day arrears increased to 3.36% at December 2012 compared to 2.66% at June 2012.

Our non-recourse home loan funding facilities consist of $238m provided by Westpac Banking Corporation and $50m provided by Bendigo and Adelaide Bank. In September 2012 FSA Group announced that Westpac Banking Corporation had renewed its non-recourse home loan funding facility for a further term until 15 October 2015.

We are currently exploring opportunities, which should they come to fruition, will allow us to grow our loan pool.

2

DIRECTORS’ REPORT Continued

Operational Performance continued

Small Business

The Small Business division offers factoring finance to assist small businesses with cash flow management. We have originated a high quality loan pool of $23m. Our $25m limited-recourse factoring finance funding facility, which has been temporarily increased to $30m, is provided by Westpac Banking Corporation. We are currently in discussions to increase the facility limit and extend the term.

FSA Group is experiencing demand for factoring finance because the availability of credit for small businesses continues to remain tight. We expect this division to be profitable in 2013.

Outlook

The market environment continues to remain uncertain. Consumer debt levels are however at a record high and demand for our products and services is steady. We are continuing with our vision to build a range of accessible solutions which support our clients throughout their entire financial lifecycle.

AUDITOR’S INDEPENDENCE DECLARATION

The auditor’s independence declaration under Section 307C of the Corporations Act 2001 is attached to this financial report on page 4.

Signed in accordance with a resolution of directors made pursuant to section 306(3) of the Corporations Act, on behalf of the board of directors.

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Tim Odillo Maher Director Sydney 22 February 2013

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Tel: +61 2 9251 4100 Level 10, 1 Margaret St Fax: +61 2 9240 9821 Sydney NSW 2000 www.bdo.com.au Australia

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DECLARATION OF INDEPENDENCE BY GRANT SAXON TO THE DIRECTORS OF FSA GROUP LIMITED

As lead auditor for the review of FSA Group Limited for the half-year ended 31 December 2012, I declare that to the best of my knowledge and belief, there have been:

• no contraventions of the auditor independence requirements of the Corporations Act 2001 relation to the review; and

• no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of FSA Group Limited and the entities it controlled during the period.

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Grant Saxon

Partner

BDO East Coast Partnership

Sydney, 22 February 2013

4

BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

FSA Group Limited

Consolidated statement of profit or loss and other comprehensive income

For the six months ended 31 December 2012 Note Revenue and income Fees from services Finance income Finance expenses Net finance income Other losses Total revenue and other income net of finance expense Share of profits of an associate using the equity accounting method 5 Marketing expenses Administrative expenses Operating expenses Profit before income tax expense Income tax expense Profit after income tax expense Other comprehensive income, net of tax Total comprehensive income for the period Total comprehensive income for the period attributable to: Non-controlling interest Owners of the parent Basic earnings per share (cents per share) 6 Diluted earnings per share (cents per share) 6	Consolidated Entity 31 December 2012 31 December 2011 $ $ 22,699,110 21,549,193
	15,966,539 15,669,758 (7,461,164) (8,648,984)
	8,505,375 7,020,774
	(400) (2,197)
	31,204,085 28,567,770
	1,354 2,889
	(3,199,887) (3,167,927) (6,740,268) (6,296,290) (14,109,724) (12,489,089)
	7,155,560 6,617,353 (2,101,532) (1,914,347)
	5,054,028 4,703,006 - -
	5,054,028 4,703,006
	735,143 983,743 4,318,885 3,719,263
	5,054,028 4,703,006
	3.33 2.69 3.33 2.69

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

5

FSA Group Limited

Consolidated statement of financial position

As at 31 December 2012

Note Current assets Cash and cash equivalents Trade and other receivables Other assets Total current assets Non-current assets Trade and other receivables Investment in associates 5 Plant and equipment Deferred tax assets Intangible assets Total non-current assets Assets financed by non-recourse liabilities Cash and cash equivalents Mortgage finance assets Total assets financed by non-recourse financial liabilities Total assets Current liabilities Trade and other payables Current tax liabilities Borrowings Provisions Total current liabilities Non-current liabilities Borrowings Provisions Deferred tax liabilities Other Financial Liabilities Total non-current liabilities Non-recourse financial liabilities Borrowings Total non-recourse financial liabilities Total liabilities Net assets Equity Share capital 8 Reserves 9 Retained earnings Non-controlling interest Total equity	Consolidated Entity 31 December 2012 30 June 2012 $ $ 10,905,427 6,498,741 49,562,390 50,877,863 850,435 954,137 61,318,252 58,330,741 31,668,317 30,894,720 - 68,574 377,977 408,365 447,995 370,777 3,259,711 3,258,280 35,754,000 35,000,716 11,873,702 12,021,320 233,130,348 237,765,162 245,004,050 249,786,482 342,076,302 343,117,939 10,190,285 9,696,952 3,692,816 2,204,024 28,372,049 4,465,234 867,762 884,171 43,122,912 17,250,381 - 27,208,469 432,873 322,681 12,985,298 12,820,209 2,425,000 - 15,843,171 40,351,359 228,101,666 227,985,880 228,101,666 227,985,880 287,067,749 285,587,620 55,008,553 57,530,319 7,160,382 9,275,913 (2,513,434) 104,652 47,878,992 45,542,721 2,482,613 2,607,033 55,008,553 57,530,319	Consolidated Entity 31 December 2012 30 June 2012 $ $ 10,905,427 6,498,741 49,562,390 50,877,863 850,435 954,137 61,318,252 58,330,741 31,668,317 30,894,720 - 68,574 377,977 408,365 447,995 370,777 3,259,711 3,258,280 35,754,000 35,000,716 11,873,702 12,021,320 233,130,348 237,765,162 245,004,050 249,786,482 342,076,302 343,117,939 10,190,285 9,696,952 3,692,816 2,204,024 28,372,049 4,465,234 867,762 884,171 43,122,912 17,250,381 - 27,208,469 432,873 322,681 12,985,298 12,820,209 2,425,000 - 15,843,171 40,351,359 228,101,666 227,985,880 228,101,666 227,985,880 287,067,749 285,587,620 55,008,553 57,530,319 7,160,382 9,275,913 (2,513,434) 104,652 47,878,992 45,542,721 2,482,613 2,607,033 55,008,553 57,530,319
		58,330,741
		30,894,720 68,574 408,365 370,777 3,258,280
		35,000,716
		12,021,320 237,765,162
		249,786,482
		343,117,939
		9,696,952 2,204,024 4,465,234 884,171
		17,250,381
		27,208,469 322,681 12,820,209 -
		40,351,359
		227,985,880
		227,985,880
		285,587,620
		57,530,319
		9,275,913 104,652 45,542,721 2,607,033
		57,530,319

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

6

FSA Group Limited

Consolidated statement of cash flows

For the six months ended 31 December 2012	Consolidated Entity Six months ended Six months ended 31 December 2012 31 December 2011 $ $ Inflows/ Inflows/ (Outflows) (Outflows) 26,436,018 20,849,681 (23,353,714) (20,284,739) 13,111,467 12,462,217 (7,324,541) (8,465,025) (887,146) (477,495) (524,869) (932,044) 7,457,215 3,152,595 (80,408) (71,443) (55,551) (21,322) (330,750) - 400 - 2,522,154 (7,411,407) 125,851 285,516 2,937,598 (330,481) (525,000) (409,500) 4,594,294 (7,958,637) (2,905,883) 13,490,860 (174,163) (444,894) (2,729,781) (399,721) (1,982,614) (1,382,538) (7,792,441) 11,263,707 4,259,068 6,457,665 18,520,061 16,807,474 22,779,129 23,265,139 10,905,427 11,177,622 11,873,702 12,087,517
Cash flows from operating activities Receipts from customers and debtors Payments to suppliers and employees Finance income received Finance cost paid Net cash payments for institutional creditor distributions Income tax paid
Net cash inflow from operating activities
Cash flows from investing activities Acquisition of property, plant and equipment Acquisition of intangibles Acquisition of subsidiary (net of cash acquired) Proceeds from disposal of property, plant and equipment Net decrease (increase) in mortgage finance assets Net decrease in bridging finance assets Net decrease (increase) in factoring finance assets Net increase in other loans
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities Net proceeds (repayments) from (to) borrowings Payment of distributions to Non-Controlling interests – Warehouse Trust Share buyback Dividends paid to company’s shareholders
Net cash (outflow)/inflow from financing activities
Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year
Cash and cash equivalents at the end of the financial year
Cash and cash equivalents at the end of the half year is represented by: Current assets Cash and cash equivalents Assets financed by non-recourse financial liabilities Cash and cash equivalents Total cash and cash equivalents at the end of the half year
	22,779,129 23,265,139

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

7

FSA Group Limited

Consolidated statement of changes in equity

For the six months ended 31 December 2012

At 1 July 2011 Total comprehensive income Transactions with owners in their capacity as owners Share buy-back Share based payments expense Dividends to shareholders Distributions to non-controlling interests At 31 December 2011 At 1 January 2012 Total comprehensive income Transactions with owners in their capacity as owners Share buy-back Share based payments expense Acquisition of Non-controlling Interest Dividends to shareholders Distributions to non-controlling interests At 30 June 2012 At 1 July 2012 Total comprehensive income Transactions with owners in their capacity as owners Share buy-back Share based payments expense Acquisition of Non-controlling Interest Dividends to shareholders Distributions to non-controlling interests At 31 December 2012	Share capital $	Reserves Retained Non- controlling Total Share based payments Reserves Other Reserves earnings interest $ $ $ $ $
	11,692,255 - (399,721) - - -	745,831 - 39,285,112 2,841,265 54,564,463 - - 3,719,263 983,743 4,703,006 - - - - (399,721) 7,725 - - - 7,725 - - (1,382,538) - (1,382,538) - - - (435,274) (435,274)
	11,292,534	753,556 41,621,837 3,389,734 57,057,661
	11,292,534 - (2,516,621) - 500,000 - -	753,556 - 41,621,837 3,389,734 57,057,661 - - 4,808,628 1,194,760 6,003,388 - - - - (2,516,621) 7,725 - - - 7,725 - (656,629) - (743,371) (900,000) - - (887,744) - (887,744) - - - (1,234,090) (1,234,090)
	9,275,913	761,281 (656,629) 45,542,721 2,607,033 57,530,319
	9,275,913 - (2,729,781) - 614,250 - -	761,281 (656,629) 45,542,721 2,607,033 57,530,319 - - 4,318,885 735,143 5,054,028 - - - - (2,729,781) 4,046 - - - 4,046 - (2,622,132) - (747,869) (2,755,751) - - (1,982,614) - (1,982,614) - - - (111,694) (111,694)
	7,160,382	765,327 (3,278,761) 47,878,992 2,482,613 55,008,553

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

8

FSA Group Limited

Notes to the consolidated interim financial statements

31 December 2012

1. REPORTING ENTITY

FSA Group Limited (the ‘Company’) is a for-profit company domiciled in Australia. The consolidated interim financial statements of the Company as at and for the six months ended 31 December 2012 comprise the Company and its subsidiaries (together referred to as the ‘Group’) and the Group’s interests in the associates and jointly controlled entities.

The principal activities of FSA Group are the provision of debt solutions and direct lending services to individuals and businesses.

2. BASIS OF PREPARATION

Statement of compliance

These consolidated interim financial statements have been prepared in accordance with Australian Accounting Standard AASB 134 “ Interim Financial Reporting ” and the Corporations Act 2001 and do not include all of the information and notes of the type normally required for full annual financial statements. Accordingly these half year financial statements are to be read in conjunction with the annual report for the year ended 30 June 2012 and any public announcement made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

These consolidated interim financial statements were approved by the Board of Directors on 22 February 2013.

New, revised, or amending Accounting Standards and Interpretations adopted

The Group has adopted all new, revised, or amending Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.

Any new, revised or amending Accounting Standards or Interpretations that are not mandatory yet have not been early adopted.

Any significant impact on the accounting policies of the Group from the adoption of these Accounting Standards and Interpretations are disclosed in the relevant accounting policy. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group.

The following Accounting Standards and Interpretations are most relevant to the Group:

AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income The Group has applied AASB 2011-9 amendments from 1 July 2012. The amendments requires grouping together of items within other comprehensive income on the basis of whether they will eventually be ‘recycled’ to the profit or loss (reclassification adjustments). The change provides clarity around the nature of items presented as other comprehensive income and the related tax presentation.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by the Group in these consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 30 June 2012.

4. SEGMENT INFORMATION

FSA Group Limited is an Australian entity whose principal activities are:

• Services include debt agreement proposal preparation and administration, trustee services and other related services.

• Home Loans includes the provision of mortgage finance, home loan broking and mortgage management.

• Small Business includes the provision of factoring finance and other related services.

The Group operates in one geographic region – Australia.

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FSA Group Limited

Notes to the Consolidated Half-Year Financial Statements

31 DECEMBER 2012

4. SEGMENT INFORMATION continued

Business segment Revenue and Results

Half-year ended 31 December

Revenue and Income External sales Finance Income Finance expense Net Finance Income Other Income Internal sales and income Eliminations Total Revenue and Income Results Segment profit before tax Income tax (expense)/benefit Profit for the year Assets Segment assets Eliminations Total assets	Services	Services	Home Loans	Home Loans	Small B	usiness	Other/Unallocated	Other/Unallocated	Consolidated Total	Consolidated Total
	31/12/2012	31/12/2011	31/12/2012	31/12/2011	31/12/2012	31/12/2011	31/12/2012	31/12/2011	31/12/2012	31/12/2011
	$ 21,595,330 6,191 -	$ 20,256,780 36,179 (3,179)	$ 1,038,355 11,644,089 (6,750,082)	$ 570,937 13,120,043 (8,091,869)	$ 65,425 4,142,550 (711,082)	$ 721,476 2,469,712 (553,936)	$ - 173,709 -	$ - 43,824 -	$ 22,699,110 15,966,539 (7,461,164)	$ 21,549,193 15,669,758 (8,648,984)
	6,191 (51) 261,924 -	33,000 (2,197) 283,200 -	4,894,007 - - -	5,028,174 - - -	3,431,468 (349) 1,496 -	1,915,776 - - -	173,709 - - -	43,824 - 156,250 -	8,505,375 (400) 263,420 (263,420)	7,020,774 (2,197) 439,450 (439,450)
	21,863,394 4,607,160 (1,387,448)	20,570,783 5,015,801 (1,521,114)	5,932,362 2,555,269 (681,497)	5,599,111 2,115,644 (536,926)	3,498,040 (125,621) 25,920	2,637,252 (597,253) 184,150	173,709 118,752 (58,507)	200,074 83,161 (40,457)	31,204,085 7,155,560 (2,101,532)	28,567,770 6,617,353 (1,914,347)
	3,219,712	3,494,687	1,873,772	1,578,718	(99,701)	(413,103)	60,245	42,704	5,054,028	4,703,006
	Services		Home Loans		Small B	usiness	Other/Unallocated		Consolidated Total
	31/12/2012	30/06/2012	31/12/2012	30/06/2012	31/12/2012	30/06/2012	31/12/2012	30/06/2012	31/12/2012	30/06/2012
	102,377,493	94,132,984	258,613,228	262,108,899	29,868,954	29,564,557	21,149,706	20,014,063	412,009,381 (69,933,079)	405,820,503 (62,702,564)
									342,076,302	343,117,939

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FSA Group Limited

Notes to the Consolidated Half-Year Financial Statements

31 DECEMBER 2012

5. DETAILS OF ASSOCIATES

The consolidated entity had 50% shareholding in its associate, Huntingdale Smythe Lawyers Pty Limited. During the period the associate wound up its operations, and the consolidated entity disposed of its shareholding.

6. EARNINGS PER SHARE

(a) Reconciliation of earnings used to calculate basic and dilutive earnings per share Comprehensive income for the period – Owners ($) Basic earnings per share (cents) Diluted earnings per share (cents) (b) Weighted average number of ordinary shares outstanding during the year Weighted average number of ordinary shares outstanding during the year used in calculating dilutive EPS	31-Dec-12 31-Dec-11 Value Value $ $ 4,318,885 3,719,263 3.33 2.69 3.33 2.69 Number Number 129,566,729 138,030,070
	129,566,729 138,030,070

7. DIVIDENDS

Dividends recognised in the current financial period by FSA Group Limited are:

Final – ordinary	Value per share Total Amount Franked Date of Payment
	$ 0.0155 $1,982,615 100% 28 September 2012

Franked dividends declared or paid during the financial year were franked at a tax rate of 30%.

Dividends paid during financial year 2012 are:

Final – ordinary Interim – ordinary	Value per share Total Amount Franked Date of Payment
	$ 0.0100 $1,382,538 100% 30 September 2011 0.0065 $887,744 100% 20 March 2012

On 22 February 2013, the directors declared a fully franked dividend of 1.75 cents to be paid on 20 March 2013, a total estimated distribution of $2,201,232 based on ordinary shares on issue as at 22 February 2013.

8. SHARE CAPITAL

The following movements in share capital are material to the understanding of the interim period:

Six months to 31 December 2012

Shares on issue at 1 July 2012 Less shares bought back during year Add shares issued as part of the consideration for acquisition Shares on issue at 31 December 2012	Numbers Value $ 131,114,587 9,275,913 (6,929,914) (2,729,781) 1,600,000 614,250
	125,784,673 7,160,382

11

FSA Group Limited

Notes to the Consolidated Half-Year Financial Statements

31 DECEMBER 2012

8. SHARE CAPITAL continued

Six months to 31 December 2011

Shares on issue at 1 July 2011 Shares buy back Shares on issue at 31 December 2011	Numbers Value $ 138,253,785 11,692,255 (1,386,566) (399,721)
	136,867,219 11,292,534

9. ACQUISITION OF MINORITY INTEREST IN 180 GROUP PTY LIMITED

On 30 November 2012, FSA Group Limited, through its wholly controlled entity 180 Group Holdings Pty Limited, acquired the remaining 30% of 180 Group Pty limited ordinary shares, so becoming the sole shareholder and owner of 180 Group and making 180 Group a fully integrated, wholly-owned subsidiary of FSA Group.

The shares were transferred for an initial consideration (settled in cash and shares in FSA Group Limited), as well as a deferred consideration component due to be paid on or after 30 June 2015. As at 31 December 2012, FSA Group Limited has used relevant valuation techniques in order to recognise a deferred consideration payable. The consideration recognised by FSA Group Limited in excess of the carrying amount of the non-controlling interest in 180 Group Pty Limited is recognised in Other Reserves as at 31 December 2012. In accordance with the Accounting Standards, this excess is recognised directly in equity and attributable to the owners of the parent.

10. COMMITMENTS

At the reporting date loan applications accepted by the Group, but not yet settled amounted to $3,394,000 (2011: $6,458,800).

11. SUBSEQUENT EVENTS

There have been no events since 31 December 2012 that may significantly affect the Group’s operations, the results of those operations or the Group’s state of affairs in future financial years other than the dividends declared as disclosed in Note 7.

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Directors’ Declaration

In the Directors' opinion:

1. the attached financial statements and notes thereto comply with the Corporations Act 2001 , Australian Accounting Standard AASB 134 ' Interim Financial Reporting' , the Corporate Regulations 2001 and other mandatory professional reporting requirements;

2. the attached financial statements and notes thereto give a true and fair view of the consolidated entity's financial position as at 31 December 2012 and of its performance for the financial half-year ended on that date; and

3. there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors made pursuant to section 303(5) of the Corporations Act 2001. On behalf of the Directors.

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Tim Odillo Maher Director Sydney 22 February 2012

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Tel: +61 2 9251 4100 Level 10, 1 Margaret St Fax: +61 2 9240 9821 Sydney NSW 2000 www.bdo.com.au Australia

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INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of FSA Group Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of FSA Group Limited, which comprises the consolidated statement of financial position as at 31 December 2012, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a statement of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising FSA Group Limited and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the disclosing entity are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2012 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of FSA Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

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Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of FSA Group Limited, would be in the same terms if given to the directors as at the time of this auditor’s review report.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of FSA Group Limited is not in accordance with the Corporations Act 2001 including:

• A. giving a true and fair view of the consolidated entity’s financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and

• B. complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001 .

BDO East Coast Partnership

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Grant Saxon

Partner

Sydney, 22 February 2013

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